Gov. Brown presents tax hike proposal to voters

Measure would raise rates on highest earners, sales

Published 4:00 am, Tuesday, December 6, 2011

Photo: Rich Pedroncelli, AP

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Gov. Jerry Brown discusses his plan to redirect thousands of lower-lever criminals from state prison to county jails while speaking before law enforcement officials in Sacramento, Calif., , Wednesday, Sept, 21, 2011. Brown told the nearly 500 sheriffs, prosecutors, police chiefs and probation officers, that the shift is a bold step and one that is long overtime, and promises to seek a constitutional amendment guaranteeing them the money to handle the increased inmate load. (AP Photo/Rich Pedroncelli)
Ran on: 09-25-2011
Gov. Jerry Brown has promised to veto many of the bills he sees.
Ran on: 09-25-2011
Gov. Jerry Brown has promised to veto many of the bills he sees. less

Gov. Jerry Brown discusses his plan to redirect thousands of lower-lever criminals from state prison to county jails while speaking before law enforcement officials in Sacramento, Calif., , Wednesday, Sept, ... more

Photo: Rich Pedroncelli, AP

Gov. Brown presents tax hike proposal to voters

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Sacramento --

Gov. Jerry Brown on Monday unveiled his plan to raise billions of dollars in new tax revenue to aid public education and guarantee funding for local law enforcement agencies that have taken over some state public safety duties.

The governor filed a ballot initiative with the attorney general that would raise taxes on the top income earners in the state as well as raise the state sales tax by half a cent. Both would expire in January 2017, and Brown warned of further cuts to state services if voters reject the proposal in the election in November.

"The stark truth is that without new tax revenues, we will have no other choice but to make deeper and more damaging cuts to schools, universities, public safety and our courts," Brown wrote in an "open letter to the people of California" that was posted on his website and e-mailed to supporters.

He recounted some of the events of his first year in office, including his coming into office facing a $26 billion deficit, significant budget cuts and his inability to persuade Republicans to put a tax measure on the ballot earlier this year.

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"I am going directly to the voters because I don't want to get bogged down in partisan gridlock as happened this year," he wrote. The tax increases would raise about $7 billion per year over five years.

But Republicans at the Capitol said Brown was relying on the known failed strategy of raising taxes, as voters have consistently rejected any statewide increase in taxes at the ballot box the past several years. They said the governor should focus on cutting state spending and decreasing unemployment.

"If he really cares about protecting schools and our most vulnerable, he will stop whining and get back to the negotiating table so we can hammer out a bipartisan budget deal in time to avoid additional harm to our economy. No one ever said that leadership would be easy," said Sen. Sam Blakeslee, R-San Luis Obispo.

Competing measures

Even without the governor's ballot initiative, which would change the state Constitution and require a significant signature-gathering effort to qualify, several other measures also seek to increase taxes, primarily on Californians with the highest earnings.

Under Brown's proposal, individual tax filers who make more than $250,000 per year would see their income tax increase by 1 percentage point; those making between $300,000 and $500,000 would face a 1.5 percentage-point increase; and the top earners who make more than $500,000 per year would see a 2 percentage-point increase.

Those income thresholds double for joint filers, meaning that a couple filing taxes together would have to earn more than $1 million to face the largest increase.

For those who file as head of household - filers with dependents - the increases in the tax rates are the same, but the thresholds are $340,000 per year for the first tier; between $408,000 and $680,000 for the second tier; and above $680,000 for the highest-tier increase.

All Californians would pay the half-cent increase in the state sales tax.

If passed, the income tax increase would be retroactive to the start of 2012 and the sales tax increase would begin in 2013.

Money for safety

The measure also would constitutionally guarantee the funding source passed by the Legislature as part of this year's budget for the counties and local entities assuming more public safety duties, which were passed down as part of this year's budget package.

Additionally, money generated by the increased taxes would be put into a separate account that could only be spent on K-12 education and community colleges.

Under California's complex education funding structure and the ballot language submitted by the governor, it frees up general fund money that would have been spent on K-12 and community colleges that may be spent on other programs.

The amount would vary year to year, but it probably would be in the billions.

Some observers say too many tax measures increases the likelihood that voters will reject all of them. The governor's political adviser, Steve Glazer, said there will be conversations with backers of those other measures to try to pare down the number ultimately on the ballot.

But there are signs that backers of other measures won't be persuaded to drop their plans. One measure, backed by the California Federation of Teachers and the progressive Courage Campaign, would guarantee $6 billion annually for K-12 and higher education, by raising taxes on top earners. It has no expiration date.

The lack of a guarantee for higher education in the governor's plan is a glaring hole, some say.

Charlie Eaton, a graduate student at UC Berkeley and a leader in the union that represents student workers like teaching assistants and that backs the separate plan, said, "For the tens of thousands of students who have marched the past few months, the governor's proposal is a slap in the face."

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